Dialog to Pay $310 Million for PMIC Pioneer

LONDON — Mixed-signal, power, and RF chip vendor Dialog Semiconductor plc is set to buy power management IC (PMIC) pioneer iWatt Inc. for $310 million in cash, plus up to $35 million if the acquired business reaches certain performance goals.

Dialog is already a successful vendor of PMICs for mobile consumer equipment as well as audio and short-range wireless ICs. The acquisition of iWatt -- a fabless company founded in 2000 and based in Campbell, Calif. -- will boost Dialog's position in PMICs for LED-based solid state lighting and AC/DC charger-adaptor power supplies. The deal has been approved by the boards of directors of both companies, and it is expected to close before the end of July 2013.

Dialog has been in the hunt for an acquisition for some time and disclosed it had about $300 million to spend or invest earlier this year in an EE Times article. (See: Dialog on the acquisition trail.) Dialog said it has taken on additional debt of $125 million to help fund the acquisition of iWatt.

iWatt is privately held and so has not had to report its financial figures, but Dialog has revealed that iWatt did well in the 2012 financial year. Annual sales at the California firm were $74 million, up 46 percent year-on-year, with a gross margin of 49 percent. Since 2007 iWatt has shipped about 1 billion PMICs, according to Dialog.

The acquisition will provide Dialog with market leadership in PMICs for AC/DC charger-adaptors for smartphones and tablet computers and by 2015 will increase the size of markets that Dialog can address with its products by about $1.8 billion to $5.9 billion, Dialog said in a statement. The Dialog total available market is about half of the global power management semiconductor market of $11.5 billion that research firm Gartner predicts for 2015.

There is an opportunity to provide next-generation fast charger-adaptors, and Dialog believes it will also benefit from iWatt's strong presence in Asia.

Both the mobile device charger market and the LED lighting markets are placing an emphasis on power efficiency providing spectacular growth opportunities. Dialog said that LED lightbulb shipments are set to grow from 440 million units in 2012 to 2.7 billion units in 2016, referencing management consultancy McKinsey & Company as its source.

I don't think $310 Million is too much. Power management IC business is clearly on a decent growth trajectory. With the wrold flipping to LEDs slowly in time this shuld remain healthy biz for a while...Kris